With the employment number out and interest rates moving higher (because of the 2.9% year over year wage increase) by 4 basis points we may have another day of setbacks in the income issues market.
While it is very possible that most preferreds and baby bonds may fall today we think that bigger bargains may be yet to come in the next 5 months. If you are a purely income investor not so worried about you capital maybe you want to nibble a bit.
If you are buying now we would stick to high yield (mortgage REITs?), fixed-to-floating, short maturity baby bonds and term preferreds.
For holders of the high quality, low coupon perpetual issues DON’T panic. If you own these kind of issues we assume you are in it for the safe income stream and this will continue, but studying your brokerage statement multiple times a day is a good way to do HASTY things like selling. DON’T become a buy high, sell low income investor–although honestly at least 1/2 of individuals are this type of investor.